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This e-newsletter gives you an overview of international corporate tax developments being reported globally by KPMG member firms in the American Region between 1 May and 31 May 2013

Argentina Colombia Mexico Uruguay
Brazil Costa Rica Panama USA
Canada Curacao Peru

For a full summary of global tax developments, visit kpmg.com/TaxNewsFlash.

To contact the Global International Corporate Tax Group email go-fmglobalict@kpmg.com.

  Tax area concerned Relevant date/case reference Description of measures and publication link
(Considerations in italic where necessary)
Argentina
Tax legislation adopted and regulatory update Incentives 30 June 2013 A decree issued 2 May 2013 extends to 30 June 2013 and revises measures in Argentina’s tax credit incentive regime for capital goods (Régimen de Incentivo Fiscal para Bienes de Capital). Decreto 480 extends the incentives through June 2013, and provides for changes to the tax incentives regime for capital goods. Thus, the last day for the tax credit incentive regime for capital goods is 30 June 2013. Domestic manufacturers must submit an affidavit to the tax authorities concerning the number of employees under the regime’s provisions as of 31 December 2011.
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Transfer pricing 30 May 2013 Argentina’s tax authority (AFIP) issued a decree that replaces the process for determining when countries are “tax haven” jurisdictions for transfer pricing purposes. Decreto 589/2013 states that the AFIP will prepare a new list of countries or territories that have signed tax information exchange agreements with Argentina and, thus, are considered as cooperating jurisdictions for purposes of tax transparency. Accordingly, countries or territories that are not included on this list will be considered countries with low tax or no taxation—i.e., tax havens—and thus, transaction with entities located in these countries will be subject to Argentina’s transfer pricing regime.
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Brazil
Tax legislation adopted and regulatory update Indirect tax 31 May 2013 Taxpayers may seek amnesty to resolve their indirect tax debts with the state of São Paulo, with respect to ICMS (a state-level value added tax) and ICM (tax on the circulation of goods), provided that the taxpayers adhere to payment plans under a special installment agreement program. Under the amnesty program, taxpayers may settle their ICMS or ICM liabilities by adhering to an installment plan that stretches to May 31, 2013, from the beginning of March 2013, under the special installment agreement program (known as “PEP”).
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Corporate income tax May 2013 With changes to the accounting rules in Brazil, the Office of the Attorney-General of the National Treasury expressed an opinion that what would previously have been tax-exempt dividend distributions may now be taxable based on an opinion that, under the revised accounting rules, profits may not have been previously taxed at the corporate level.
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IOF 2 April 2013 Under decree that reduces the rate of the “tax on financial operations” (Imposto sobre Operações Financeiras—IOF) for investments in Brazil’s infrastructure sector, beginning 2 April 2013, the IOF rate is 0% with respect to certain financial transactions made for purposes of financing certain infrastructure-related projects. IOF is a federal tax that is levied on credit, currency exchange, insurance and securities transactions executed through financial institutions—and includes intercompany loans. The tax also applies to gold transactions.
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Customs 1 May 2013 Certain imports entering Brazil, beginning 1 May 2013, require the completion of an import content form and electronic submission of import information, using a device developed and tested in March 2013. Pursuant to Ajuste SINIEF nº 19/2012, taxpayers involved under the industrialization process program are to complete and submit an import content form (Ficha de Conteúdo de Importação) with respect to imports of goods or components destined for use in manufacturing merchandise. These taxpayers also must provide information about such imports to the federal authorities via an internet portal.
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Proposed legislation Corporate income tax January 2014 Provisional Measure 612 (published in the official gazette on 4 April 2013) includes a change to the “presumed profit method” ceiling limit amount for purpose of Brazilian entities’ calculation of their corporate income tax. Under the new provision, effective January 2014, companies with revenue up to R$ 72 million (approximately U.S. $35.9 million) in the preceding year—or R$ 6 million (approximately U.S. $3 million) times the number of months during which the company conducted activities in the preceding year if less than 12 months—may elect to calculate their corporate income tax under a “presumed profit method.”
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Canada
Proposed legislation Budget Canada April 2013 Finance Canada released Bill C-60 (Budget Bill #1) on 29 April 2013, which would implement certain measures announced in the 2013 federal budget. Under the legislation, certain provisions would:
Change the taxation of non-eligible dividends for 2014;
Extend the Class 29 CCA rate for manufacturing and processing (M&P) equipment;
Amend goods and service tax (GST) provisions;
Change the judicial process for the Canada Revenue Agency to obtain an unnamed persons requirement;
Make changes relating to customs tariffs.
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Budget Prince Edward Island 1 April 2013 The Prince Edward Island's 2013 budget was deemed substantively enacted for purposes of IFRS and ASPE after a bill to enact the budget received “first reading” on 23 April 2013. The bill includes measures to increase the small business corporate income tax rate to 4.5% (from 1%), effective 1 April 2013. The bill also provides details that were not included in the budget on changes to the province's tax credit for non-eligible dividends.
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Budget Ontario May 2013 Ontario Finance Minister on 2 May 2013 delivered the province’s 2013 budget. The budget does not include any corporate or individual (personal) tax rate changes in addition to the 2013 individual tax rate changes introduced in the 2012 Ontario budget. The budget includes changes to employer health tax and to the apprenticeship tax credit, and proposes new disclosure rules for aggressive tax avoidance transactions similar to the federal rules. Other proposals in the budget include a cost-and-rate reduction strategy that would reduce average auto insurance rates for consumers by 15%, and road tolls for non-carpooling drivers to use certain high-occupancy highway lanes.
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Corporate income tax 2013 Financial institutions, investment funds, and certain general corporations may be affected by targeted tax measures introduced in the 2013 federal budget to address what the government considers “loopholes” in the Canadian tax system. The rules affect certain financial arrangements used to convert ordinary income into capital gains (character conversion transactions) and transactions that are economically equivalent to a disposition of the property but the taxpayer retains legal ownership of the property (synthetic dispositions).
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HST 2015-2018 Large businesses in Ontario may continue to see restricted HST input tax credits past the scheduled phase-out date. Ontario Minister of Finance Charles Sousa recently sent a request to federal Finance Minister Jim Flaherty asking to extend the application of the recaptured input tax credit (RITC) program by three years to 2018.
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Corporate income tax May 2013 A proposed general corporate tax rate increase to 11% (from 10%) that was announced in a 2013 pre-election budget is not considered substantively enacted for accounting purposes because budget Bill 9, which included the rate increase, was not passed into law and officially “died” on the order paper when B.C.'s election campaign began this past April.
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Budget New Brunswick 22 May 2013 A bill to enact New Brunswick's 2013 budget measures received first reading in the provincial legislature on 22 May 2013, which for IFRS and ASPE purposes is considered substantively enacted. Bill 51 includes measures to increase the provincial general income tax rate to 12% (from 10%) and to increase the individual (personal) income tax rates to the levels that applied in 2006, among other changes.
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Budget Canada 2013 The Department of Finance Canada launched public consultations on the tax rules governing Labour-Sponsored Venture Capital Corporations (LSVCC), as part of the phase-out of the federal LSVCC tax credit announced in the 2013 federal budget. In the 2013 federal budget, the government announced that it would phase out the LSVCC tax credit, with the credit rate of:
15% for tax years that end before 2015
10% for the 2015 tax year
5% for the 2016 tax year
The credit would be eliminated for 2017 and later tax years.
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Tax legislation adopted and regulatory update GST / HST 8 May 2013 Canada’s federal government will publish long-awaited final GST / HST regulations affecting many financial institutions on 8 May 2013. With the publication of the final regulations, “selected listed financial institutions” (SLFIs) will want to consider a careful review of the more than 150 pages of regulations—including clarifications and new measures—to determine the effect of the regulations on their businesses and whether they have applied the rules correctly for the last few years.
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Other April 2013 Canada’s government announced reforms to the temporary foreign worker program. KPMG Canada produced reports that highlight the proposed changes to the program as well as discuss issues that may not have been clarified by the government but may present important considerations for employers.
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Mining M&A Activity Report First quarter 2013 Mining companies faced share price reductions through the first quarter of 2013, as equity indices fell roughly 10% farther than the prices of gold and copper. These key commodities both dropped 5%, preceding the price reduction in early April. A report prepared by the KPMG member firm in Canada presents a current snapshot of the mining M&A market, with a review of select key transactions and also a focus on the rationale behind those deals as trends take shape. The report highlights Canadian transactions, but also set in the context of global M&A deals and trends.
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Corporate income tax 1 July – 30 September 2013 The Canada Revenue Agency announced that tax-related interest rates for taxable benefits and for tax overpayments and underpayments for the third quarter of 2013 (July 1-September 30) will remain unchanged.
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Corporate income tax 1 January 2014 Increased federal and Ontario personal (individual) tax rates on “non-eligible dividends”—scheduled to be effective 1 January 2014—will affect the federal-provincial integration mechanism in 2014 with respect to:
The earnings of active business income eligible for the small business deduction;
Investment income, including interest rents and royalties, through an Ontario corporation.
As a result of items in the federal and Ontario budgets, the combined federal/Ontario top marginal tax rate on non-eligible dividends for 2014 will increase by a combined amount of 2.3% and 2.1%, respectively, in the top two Ontario marginal tax brackets.
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Mining tax 1 January 2014 The Quebec Minister of Finance presented on 6 May 2013 details of Quebec's new mining tax system. The new regime, once enacted, would be effective 1 January 2014.
The proposed mining tax regime includes the following measures:
Mining operators in Quebec would be required to pay the higher of a new minimum mining tax applied to the value of the ore at the mine shaft head and a progressive tax on excess profits.
The royalty rate for the minimum mining tax would be 1% for the first $80 million of ore extracted, and 4% of the value of ore extracted that exceeds $80 million.
A progressive 16% to 28% tax rate would apply on "excess" profits (the 28% rate would be triggered when the profit margin exceeds 50%)
An incentive to increase processing of ore in Quebec would be reflected in rules to enhance the resource allowance deduction.
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Tax facts May 2013 KPMG Canada’s annual tax guide provides quick answers to many practical questions that may arise during the tax and financial planning process.
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Provincial sales tax 1 April 2013 / 31 May 2013 Many businesses will have to file their initial B.C. provincial sales tax (PST) return on 31 May 2013. British Columbia returned to a GST and a new PST system on 1 April 2013. Businesses registered for B.C. PST that are monthly filers, or non-registered businesses that have self-assessment obligations have an initial filing deadline on 31 May 2013.
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Administrative and case law Corporate income tax Daishowa-Marubeni International Ltd. v. The Queen 2013 SCC 29 The Supreme Court of Canada unanimously rejected the tax authorities’ position that estimated future expenses relating to reforestation obligations, assumed by the purchaser of a forest tenure, were to be included in the seller’s disposition proceeds for tax purposes. The decision is viewed as having application for the oil and gas industry (concerning abandonment and reclamation liabilities) and also with respect to reclamation costs in the mining industry.
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Colombia
Administrative and case law Treaties May 2013 The constitutional court in Colombia concluded that the legislation ratifying an income tax treaty with Mexico is constitutional. The Colombia-Mexico income tax and wealth tax (impuestos sobre la renta y sobre el patrimonio) treaty is scheduled to enter into force 30 days after representatives of Colombia and Mexico notify each other that the ratification procedures required by their domestic laws have been completed.
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Costa Rica
Tax legislation adopted and regulatory update Reporting requirement June 2012 A June 2012 law established the basic rules for management of the solid industrial waste industry in Costa Rica, and a plan for management of solid waste proposes that local governments create their own municipal plan for the management of solid waste.
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Curacao
Tax legislation adopted and regulatory update Sales tax 1 May 2013 A law, referred to as the Miscellaneous Sales Tax Act and approved by the parliament of Curacao, revises the sales tax regime and is effective 1 May 2013. Among the measures contained in the new law are provisions that:
Increase the sales tax rate imposed on certain “luxury” goods or services to 9%; impose a sales tax rate of 7% on insurance and vacation time-shares; and exempt other certain “basic products” from sales tax;
Amend the sales tax regulations and implement a cash registration system to be used by businesses.
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Mexico
Other Maquiladora regime March 2013 The maquiladora regime historically has been viewed as a successful program for attracting foreign investment in Mexico. An evaluation of the maquiladora regime, from a tax efficiency standpoint, allows for a comparison of its effectiveness against programs offered by other countries. A KPMG report includes an analysis of the tax competitiveness of the maquiladora regime against that of comparable promoting regimes in other economies.
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Proposed legislation Mining May 2013 Under a pending proposal relating to mining activities in Mexico, an additional levy of 5% would be made by mining concessionaires to states and municipalities where such extraction is conducted, as a form of economic support for the localities. Parties holding mining concessions would remit to the states and municipalities an amount equal to 5% of their mining activity income. In computing this income amount, the mining concessionaires would reduce their taxable income by certain normal deductions (e.g., finance costs, tax, depreciation, and amortization).
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Panama
Tax legislation adopted and regulatory update Reporting requirements 31 May 2013 Panama’s income tax rules require taxpayers to submit a form 03 (Planilla 03) providing certain employee information (e.g., employee names, salary amounts) to the tax authorities by 31 May 2013. 
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Peru
Tax legislation adopted and regulatory update Transfer pricing 30 May 2013 Guidance published by the tax authority introduces changes regarding the formal transfer pricing obligations and reporting requirements in Peru. Among the new rules, it is now mandatory for taxpayers to provide an annual transfer pricing technical study.
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Uruguay
Tax legislation adopted and regulatory update Corporate income tax May 2013 Uruguay’s tax authorities (Dirección General Impositiva—DGI) provided guidance concerning a tax exemption for amounts realized on the sales of certain property used as tree plantations. The DGI submitted a response to a corporate taxpayer’s question (Consulta No. 5.676) concerning the qualifications of the corporate income tax (Impuesto a la Renta de Actividades Económicas) exemption with respect to the sale of a tree plantation.
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USA
Tax legislation adopted and regulatory update For legislative changes and regulatory updates for the US please visit below link to the TaxNewsFlash United States.
Read TaxNewsFlash US

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